Connacher Gets Approval to Begin Work at Great Divide Oil Sands Project
Connacher Oil and Gas Limited reports that is has received its OSE Order No. 050027 from Alberta Environment which will allow it to commence and proceed with its 2005/2006 core hole drilling program on its 107-section Great Divide oil sands property in northeastern Alberta. Core hole licensing procedures are underway and the initial core holes will be drilled on and around Connacher's Pod One accumulation, development of which to produce up to 10,000 bbl/d of bitumen is awaiting EUB and Alberta Environment approval following submission of an application last August 2005.
The initial locations are easily accessible from Highway 68, which bisects Connacher's property. They are designed to determine if, as anticipated, the areal extent of and reserve base of Pod One can be expanded. They result from the interpretation of a 3D seismic program shot over Pod One in the spring of this year and from continuing geological evaluation.
Upon completion of the Pod One core holes, the rig will be moved to the extreme southeastern portion of the lease block to commence detailed evaluation of and anticipated confirmation of the presence of additional pods or accumulations which are indicated to possibly be present by the results of previously-drilled conventional well bores which contained significant bitumen-bearing McMurray Sands.
Subject to weather conditions and the procurement of an additional rig later in the drilling season, it is anticipated up to 75 core holes will be drilled by Connacher during this winter's program. As 3D seismic programs yielded excellent results last season, Connacher anticipates three separate programs will be shot over three indicated accumulations during the first quarter of 2006. If Connacher is successful in establishing adequate additional reserves within any of these prospective accumulations, it anticipates securing an updated reserve report by mid-summer 2006 and, if warranted, submitting shortly thereafter an application (or applications) to the regulatory authorities to develop an additional 10,000 bbl/d pod (or pods) in 2007 and beyond.
Connacher anticipates its rig camp will be set up on December 30, 2005 and that the CoraLynn rig which has been contracted for the program will be drilling by January 2, 2006. A total of 24 kilometers of main access road to the eastern portion of the lease to be evaluated has already been frozen in to facilitate movement of the rig to the desired locations.
Connacher is proceeding with numerous initiatives related to Pod One development, while it awaits regulatory approval, in order to be prepared for timely action when approval is received.
In other developments, Connacher is finalising documentation related to its proposed purchase of refining assets located in Great Falls, Montana, USA and also with respect to its proposed purchase of Luke Energy Ltd. (LKE - TSX), both of which transactions were previously announced. Additionally, the associated financing is being finalized.
Finally, Connacher owns 35 percent of Petrolifera Petroleum Limited
(PDP - TSX) which today announced its fifth successive indicated crude oil discovery on its 100 percent-owned Puesto Morales/Rinconada concession in the Neuquen Basin, Argentina. Connacher's holdings of Petrolifera now have a stock market value of approximately $100 million based on current trading levels, or approximately $0.72 per basic Connacher common share outstanding.
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